Challenges to New California Independent Contractor Law and Ban on Mandatory Arbitration Agreements Wind Through the Courts

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As expected, there have been a number of legal challenges to California Assembly Bills 5 and 51, both of which were signed into law by California Governor Gavin Newsom and set to go into effect on January 1 of this year.

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2020 Legislative Update for California Employers

California flagBy Andrew J. Sommer and Megan S. Shaked

Following the 2018 legislative session, which was dominated by laws responding to the #MeToo movement, 2019 has produced a long list of new employment laws on a myriad of topics.  From a new test for determining independent contractor status to a ban on no rehire agreements and revamped reporting standard for serious workplace injuries and illnesses, 2020 brings significant changes for California employers.  Though many of these laws will add items to the HR to-do list, employers have at least secured a one-year reprieve for completing mandatory harassment prevention training introduced last year.

Key changes affecting private sector employers are summarized below.  Unless otherwise indicated, these new laws take effect January 1, 2020.

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California Employers Should Think Twice Before Inserting No Rehire Language in Settlement Agreements

AB 749California has just passed Assembly Bill (AB) 749 resolving an ambiguity under current case law by generally prohibiting an employer from requiring, in settling an employment dispute, that a current or former employee agree not to obtain future employment with that employer.

A similar issue arose last year in Golden v. Cal. Emergency Physicians Med. Grp., in which the Ninth Circuit Court of Appeals ruled that the no hire provision contained in a settlement agreement between a physician and his former employer, a physician medical group, constituted a “restraint of a substantial character” on the physician’s medical practice and therefore violated California’s non-compete law, Business and Professions Code section 16600.  Specifically, the Ninth Circuit found that the agreement’s preclusion of the physician from working at “any facility owned or managed by” the employer was lawful but that it violated Section 16600 to the extent that it permitted the employer to terminate the physician from employment with any medical facility where the employer contracts or may later contract for services.

AB 749 expands on this Ninth Circuit ruling by barring any agreement to settle an employment dispute from containing a provision “prohibiting, preventing or otherwise restricting” the employee from obtaining employment with the employer or “any parent company, subsidiary, division, affiliate or contractor of the employer.”  Significantly, the law only applies in circumstances where Continue reading

California’s Expansion of Dynamex’s ABC Test Severely Restricts When Employers May Properly Classify Workers as Independent Contractors

Last month, California Governor Gavin Newsom signed Assembly Bill 5 into law.  This lengthy bill generally codifies and expands the applicability of the three-part ABC test from the Dynamex decision in determining whether a worker is an employee or independent contractor for purposes of California Labor Code, Unemployment Insurance Code, and the Wage Orders.

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California Employers Are Not Required To Reimburse Restaurant Workers For The Cost Of Slip-Resistant Shoes Under Labor Code Section 2802

shutterstock_34577875A recent California Court of Appeal decision, Townley v. BJ’s Restaurants, Inc., has further defined the scope of reimbursable business expenses under California Labor Code section 2802, this time in the context of slip-resistant shoes for restaurant workers.

A former server filed an action under the California Labor Code Private Attorneys General Act of 2004 (PAGA), seeking civil penalties on behalf of herself and other “aggrieved employees” for California Labor Code violations, including the failure to reimburse the cost of slip-resistant shoes.  Plaintiff alleged a violation of Labor Code section 2802, which requires an employer to reimburse employees for all necessary expenditures incurred by the employee in direct consequence of the discharge of their duties.

Plaintiff argued that, because the restaurant required employees to wear slip-resistant, black, closed-toes shoes for safety reasons, such shoes should be provided free of cost or employees should be reimbursed for their cost.

The Court of Appeal, persuaded by the reasoning in an unpublished Ninth Circuit Court of Appeals decision, Lemus v. Denny’s, Inc., and guidance from the California’s Division of Labor Standards Enforcement (DLSE), held that section 2802 did not require the restaurant employer to reimburse its employees for the cost of slip-resistant shoes.  Specifically, the Court held that the cost of shoes does not qualify as a “necessary expenditure” under section 2802.

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California Legislature Embraces the Dynamex Standard for Evaluating Independent Contractor Arrangements

The California legislature is considering a bill that would codify in the Labor Code and Unemployment Insurance Code the California Supreme Court’s decision in Dynamexshutterstock_litigationwhich adopted a standard that made it significantly more difficult for employers to classify workers as independent contractors, ignoring the realities of the modern workplace and gig economy.  Assembly Bill 5 was introduced back in December 2018, and has passed the Assembly and is making its way through the Senate. 

As this blog previously noted, last year the Supreme Court in Dynamex interpreted the definition of “employee” under the California Wage Orders as placing the burden on the hiring entity seeking to characterize a worker as an independent contractor to establish each of these three factors: (A) that the worker is free from the control and direction of the hiring entity in performing the work; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.  This is known as the “ABC test.”

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California Employment Law Update for 2019 

By: Andrew J. Sommershutterstock_150165167

In the final days of California’s 2018 legislative session, and the end of his term, Governor Jerry Brown has signed into law a variety of employment bills, including a flurry of new legislation seeking to bolster the state’s workplace harassment laws in the aftermath of the #MeToo movement.  Conn Maciel Carey LLP provides this summary of key new employment laws impacting California private sector employers.  Unless otherwise indicated, these new laws just took effect on January 1, 2019.

#MeToo Legislation

Expanded Anti-Harassment Training Requirements

Existing law requires that employers with 50 or more employees provide at least two hours of sexual harassment training to all supervisory employees within six months of the individuals becoming supervisors, and at least once every two years thereafter.  Covered employers must provide classroom or other effective interactive training that incorporates the topics of sexual harassment and abusive conduct as well as harassment based on gender identity and expression and sexual orientation.

Senate Bill (SB) 1343 broadly expands the harassment training requirements to small employers and for the first time requires training of non-supervisory employees.

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